The central legal point established in the judgment is that the receipt of interim payments pending final determination of compensation does not constitute enhanced compensation under Section 45 (5) (b) of the Income Tax Act, 1961.

( 1 ) THIS appeal under Section 260a of the Income Tax Act, 1961 (Act for short) by the Revenue is against the order of the Income Tax Appellate Tribunal, Bangalore Bench in ITA No. 439/bang/1998 relating to assessment year 1994-95.

( 2 ) RESPONDENTS land measuring 2 acres 14 guntas in Gadag Betgeri was acquired under notification dated 24-4-1997 for extension of market yard. The Land Acquisition Officer made an award at the rate of 75 paise per sq. ft. in regard to the acquired land. Respondent sought increase in compensation. The Reference Court increased the compensation to Rs. 8. 50 per sq. ft. The judgment and award of the Reference Court was challenged in MFA No. 837/1987 before this Court. This Court by judgment dated 7-10-1992 determined the market price as Rs. 7/- per sq. ft plus solatium and interest.

( 3 ) THE Judgment of this Court was challenged by the Land Acquisition Officer before the Supreme Court in CA No. 12884/1996. In terms of the interim orders of this Court and the Supreme Court, respondent received four sums of Rs. 2 lakhs each on 1-4-1993, 13-6-1993, 14-7-1993 and 30-11-1993 by furnishing security Court by order dated 23-9-1996 set aside the orders of this Court and the Reference Court and remanded the matter to the Reference Court for fresh determination of the market value with the following directions: the cases are remitted to the civil Court for decision afresh after giving an opportunity to the parties to adduce evidence afresh and then decide the market value according to law. Pending these appeals since the respondents have withdrawn the amount withdrawn will be adjusted when the award was passed by the reference Court.

( 4 ) THE Assessing Officer by order dated 4-3-1997 passed in regard to assessment year 1994-95 brought the said amount to tax under Section 45 (5) (b) of the Act holding that amount received by the Assessee was deemed to be income of the year in which amounts were received. The appeal filed by the respondent was dismissed by the Commissioner of Income Tax (Appeals), Hubli by order dated 23-3-1998. On a further appeal by the respondent, the Income Tax Appellate Tribunal, Bangalore Bench in No. ITA 439/bang/1998, passed an order dated 31-7-2003 allowing the appeal and holding that the amounts received by the respondent-Assessee was not liable to tax in her hands during the period relevant to the assessment year 1994-95 as the receipt of the said amount had a condition attached to it and an absolute right thereto had not accrued to the assessee.

( 5 ) FEELING aggrieved, Revenue has come up in this appeal. On the contentions urged, the following questions of law arise for consideration: (i) Whether the Tribunal was correct in holding that amount received by the assessee does not fall within the ambit of Section 45 (5) (b) of the Act? (ii) Whether the Tribunal was correct in applying the principle laid down in CIT vs A. B. V. Gowda (1986) 157 ITR 525 in spite of the provisions of Section 45 (5) (b)? (iii) Whether the Tribunal was correct in holding that words received and deemed used in section 45 (5) (b) will not apply to receipt of amounts in pursuance of interim orders?

( 6 ) SECTION 45 deals with capital gains. Sub-Section (1) of Section 45 provides that any profits or gains arising from the transfer of a capital asset effected in the previous year shall save as otherwise provided in section 54, 54b, 54d, 54e, 54f, 54g and 54h be chargeable to income tax under the head capital gains and shall be deemed to be the income of the previous year in which the transfer took place. Sub-Section (5) of section 45 which is relevant provides thus; 45 (5): Notwithstanding anything contained in sub-section (1), where the capital gain arises from the transfer of a capital asset, being a transfer by way of compulsory acquisition under any lawand the compensation or the consideration for such transfer is enhanced or further enhanced by any Court, Tribunal or other authority, the capital gain

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